UK: A Review Of Employment Law Reform In 2013 And 2014

Last Updated: 3 February 2014
Article by Clare Gilroy-Scott

As with 2013, there will be no rest for employment law advisers, employers and HR practitioners in 2014, with further legislative change on the agenda.  Many of the changes hail from the government's Red Tape Challenge following its publication of the report "Progress on Reform" on 14 March 2013, which detailed the intended timetable for the introduction of its self-proclaimed "ambitious schedule" of employment law reforms.  Much has been anticipated in relation to the proposed reform, the aim of which has been to review policies and regulation that place requirements on employers, asking whether they are still necessary and appropriate, whether they could be simplified, or better implemented and enforced.  Some legislative change has been implemented but the impact and, indeed, a good part of the implementation timetable, still remains uncertain. This is a review of the changes in 2013 and 2014 which are probably of the most immediate practical interest for employers and HR practitioners.

2013 – A reminder of the main changes

  • Parental Leave

March 2013 saw the right to unpaid parental leave increased from 13 weeks to 18 weeks for all eligible parents.

  • Fit notes

March 2013 also saw the publication of new "fit note" guidance and this can be viewed here.

  • Collective Consultation

In April 2013 the minimum period for collective redundancies involving 100 or more employees was reduced from 90 to 45 days.  Employees on fixed term contracts which expire naturally are excluded from collective consultation requirements.

  • Whistleblowing

In June 2013 changes to whistleblowing legislation included adding a "public interest" element as a requirement of the disclosure, removing the "good faith" requirement (although where Tribunal retains the discretion to reduce any compensation awarded by up to 25%) and the introduction of vicarious liability for employers of employees who victimise colleagues because of whistleblowing.

  • Unfair dismissal

In July 2013, the maximum compensatory award for an unfair dismissal was capped at the lower of 52 weeks' pay or the statutory maximum award (currently £74,200 but expected to be increased for dismissals which are effective on or after 1 February 2014).  The 2 year qualifying period was removed in June 2013 for an unfair dismissal claim based upon political opinion or affiliation.

  • Settlement Agreements and Confidential Pre-termination Negotiations

Also in July 2013, compromise agreements were renamed "settlement agreements" and provisions were introduced into the Employment Rights Act 1996 to make some negotiations about the possible termination of an employee's employment inadmissible in unfair dismissal claims.  The protection only applies to ordinary unfair dismissal claims not claims of automatic unfair dismissal, discrimination, whistleblowing or breach of contract.  Furthermore, a Tribunal can decide, in an ordinary unfair dismissal claim, to allow such evidence if there is an allegation of "improper behaviour" during the negotiations (including harassment, discrimination and undue pressure, amongst others).  ACAS has produced a Code of Practice including template letters and settlement agreement.

  • Fees in the Employment Tribunal

Further change in July 2013 was the introduction of fees for Claimants to bring a claim in the Employment Tribunal of either £160 or £250, depending on the type of claim. Fees are also now payable at other stages of the Tribunal process, including a "hearing" fee of either £230 or £950.

  • Employee Shareholders

September 2013 saw the introduction of employee shareholders.  This is a new type of contract where an employee takes shares in the business (between £2,000 and £50,000) and in return gives up certain statutory employment rights, including unfair dismissal, redundancy payment and the right to request flexible working.  There is no income tax payable on the first £2,000 and no capital gains tax on the first £50,000.  Employees must take independent legal advice prior to entering into such a contract, the reasonable cost of which is payable by the employer.

  • Discrimination

On 1 October 2013, the provisions in the Equality Act 2010 which made employers liable if an employee was subjected to harassment by a third party on three or more occasions were repealed. However, this does not mean that employers will never be liable as other anti-harassment provisions may be sufficiently wide to cover this situation.

  • National minimum wage

From 1 October 2013, the hourly rates of national minimum wage were increased to £3.72 for those aged 16 and 17 years old, £5.03 for those who are 18 to 20 and £6.31 for those aged 21 or over.

2014 – What is on the agenda?

  • Changes to TUPE

January 2014 sees the introduction of changes to TUPE which were reported in our December edition of GD online and the article can be viewed here.

  • Increase in Statutory Awards

We are currently awaiting an announcement in relation to the annual increase in the maximum compensatory award for unfair dismissal and a "week's pay" for statutory redundancy pay and calculation of the basic award for unfair dismissal. In general these statutory limits increase each year on 1 February.

  • Mandatory ACAS pre-claim conciliation

As reported in our December edition of GD online, 6 April 2014 sees the introduction of mandatory ACAS pre-claim conciliation.  The article can be viewed here.

  • Discrimination questionnaires

The provisions in the Equality Act 2010 relating to discrimination questionnaires are to be repealed on 6 April 2014 with a more informal approach to be followed.  ACAS guidance is expected.

  • Tribunal penalties for employers

6 April 2014 also sees the introduction of financial penalties for employers who have not been successful in their defence of tribunal claims where the employer's conduct or breach has "one or more aggravating features".  The amount will be a minimum of £100 and a maximum of £5000.  If a financial award has been provided to the claimant, the penalty must be 50% of the claimant's award, subject to the maximum cap.  The employer will only have to pay 50% of the penalty if it is paid within 21 days. 

  • Equal Pay Audits

If an employer is found guilty of gender pay discrimination Employment Tribunals are to be given the power, in October 2014, to order equal pay audits.

2014 – What further change is anticipated?

  • Health & Work Advisory and Assessment Service

This is a proposed new service which will: deliver a state-funded assessment by occupational health professionals for employees after four weeks on sick leave; provide employers and employees with advice on overcoming the barriers that prevent them from returning to work; and provide case management for the minority of employees with complex needs who require on-going support to enable their return to work.

  • Right for all employees to request flexible working

At present, employers are obliged to consider requests reasonably and in accordance with a statutory procedure.  The statutory procedure will be repealed and replaced by aduty to consider requests in a reasonable manner.  The right to request flexible working will be extended to all employees who have worked for their employer for 26 weeks or more, whatever their reason for asking.  Employers should still be able to judge requests on whether they can be accommodated on business grounds. 

ACAS will produce a Code of Practice to help businesses manage this new right. 

2014 – On-going and Proposed Consultations

  • Zero-Hours Contracts

The aim of this consultation, launched on 19 December 2013, is to ensure that employees get a fair deal under these types of contract and to identify and address any abuses in this type of arrangement.  The issues highlighted include: (i) the lack of a legal definition and lack of clarity about the individual's rights; (ii) the common inclusion of provisions preventing individuals from working elsewhere even though hours, and consequently earnings, are not guaranteed under such contracts; and (iii) the pressure on the employee to accept hours offered, even when offered at short notice, out of fear that they will not be offered further work.   

  • Modern Workplaces

The Government is due to respond to the annual leave aspects of this on-going consultation process.  Proposals include, but are not limited to, providing that workers who are unable to take annual leave during a holiday year for reasons of long-term sickness, or because of absence on maternity or other family-related statutory leave, can carry the unused period over to the next year.

  • Onshore Employment Intermediaries: False Self-Employment

The main proposals under this consultation are as follows:

  • If a worker personally provides or is personally involved in providing services to an end user client, and receives pay in any form, the worker will be treated as employed.
  • If the worker is supplied to a client by an agency, the agency must account for the workers tax and NICs and report to HMRC unless the worker is on the payroll of another.
  • Agencies must submit quarterly electronic returns with details of workers from whom tax has not been deducted and the reason for the non-deduction.
  • If a worker is not subject to control or supervision by any person the PAYE obligations will not apply (examples are given in the consultation document).
  • Agency Workers Regulations and Regulation of the Recruitment Sector

The government has expressed its commitment to reviewing the Agency Workers Regulations and the Conduct Regulations, with the aim of simplifying and streamlining the recruitment sector so that businesses can use agency workers as flexibly as possible.

The proposal is to have the "simplest regulatory framework possible" but one which will restrict charging fees to agency workers, clarifies who is responsible for paying workers, does not prevent agency workers moving between jobs, regulates the use of transfer fees for temp to perm, and gives agency workers the ability to assert their rights.  Further consultation on draft legislation is anticipated.

  • Discipline and Grievances: the right to be accompanied

This consultation, which closes on 7 January 2014, aims to address what constitutes a "reasonable request" to be accompanied at disciplinary and grievance hearings.

  • Small businesses and the ACAS Code

In relation to dismissal processes, the government has expressed the need for clarity about the requirements of the ACAS Code on small businesses.  It announced that it would work with ACAS to produce an online guidance tool through the disciplinary process, focussing on the needs of the small business.  This is awaited.

  • Caste Discrimination

It is anticipated that consultation on legislation to make caste discrimination unlawful will be published in February or March 2014 with implementation in Autumn 2014.

  • Resolving Workplace Disputes

The government has stated that it intends to consult on a "rapid resolution scheme" to resolve low value and simple claims, such as holiday pay, quickly and at a lower cost. This is awaited.

Finally, employers are reminded about pensions auto-enrolment obligations.  See here for more information.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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